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Identifying Market Segments
and Targets
Lecture 2 - Contents
1.

Market Segmentation

2. Market Targeting

3.

Differentiation & Positioning
1. Market Segmentation
Dividing a market into smaller groups with distinct needs, characteristics, or
behaviors that might...
A. Segmenting Consumer Markets
1. Geographic Segmentation
2. Demographic Segmentation
3. Psychographic Segmentation
4. Beh...
A .1. Geographic Segmentation
Calls for dividing the market into geographical units such as
nations, states, regions, coun...
A .2. Demographic Segmentation
Divides a market into groups based on variables as age, gender, family

size, income, educa...
A .3. Psychographic Segmentation
Divides buyers into different groups based on social class, lifestyle, or
personality cha...
A .4. Behavioral Segmentation
Divides buyers into groups based on their knowledge, attitudes, uses or
responses to a produ...
B. Segmenting International Markets
• Companies can segment international markets using one or a combination of

several v...
Major Segmentation
Variables for Consumer
Markets in USA
C. Requirements for Effective Segmentation
To be useful, market segments must be :
Measurable :The size, purchasing power,...
To be useful, market segments must be :

Differentiable The segments are conceptually distinguishable and respond
differen...
2. Market Targeting
A. Evaluating Market Segments
B. Selecting Target Market Segments

C. Choosing a Target Strategy
A. Evaluating Market Segments
To evaluate we must look at 3 factors:
Segment Size and Growth: Company must collect & analy...
B. Selecting Target Market Segments
Target Market Definition: consists of a set of buyers who share common needs
or charac...
3. Differentiation and Positioning
Differentiation: to be branded, products must be differentiated from competitors’
ones....
Dimensions of service differentiation:
• Ordering ease: how easy for the customer to place an order ex. Delivery

• Delive...
Product Position : is the way the product is defined by consumers on important

attributes– the place the product occupies...
Decide on a value proposition

Select Customers to serve

Differentiation

Segmentation

Differentiate the market
offering...
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Marketing management topic 2

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Marketing management topic 2

  1. 1. Identifying Market Segments and Targets
  2. 2. Lecture 2 - Contents 1. Market Segmentation 2. Market Targeting 3. Differentiation & Positioning
  3. 3. 1. Market Segmentation Dividing a market into smaller groups with distinct needs, characteristics, or behaviors that might require separate products or marketing mixes. N.B Through market segmentation; companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.
  4. 4. A. Segmenting Consumer Markets 1. Geographic Segmentation 2. Demographic Segmentation 3. Psychographic Segmentation 4. Behavioral Segmentation
  5. 5. A .1. Geographic Segmentation Calls for dividing the market into geographical units such as nations, states, regions, countries, cities or neighborhoods. EXAMPLES • A company shipped low calorie snack foods to stores in neighborhoods near weight watchers clinics. • P&G introduced curry Pringles in England and Funky Soy Pringles in Asia
  6. 6. A .2. Demographic Segmentation Divides a market into groups based on variables as age, gender, family size, income, education, occupation, generation and nationality. Age: consumer needs and wants change with age. Gender: has been used in clothing, cosmetics and magazines. Income: used by marketers of products & services as automobiles, clothing and travel.
  7. 7. A .3. Psychographic Segmentation Divides buyers into different groups based on social class, lifestyle, or personality characteristics.
  8. 8. A .4. Behavioral Segmentation Divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. Occasions: Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase or use the purchased item. Coca-Cola’s “Good Morning” campaign attempts to increase Diet Coke consumption by promoting the soft drink as an early morning pick-me-up. Usage Rate: Markets can be segmented into light, medium and heavy product users. Loyalty Status: markets can be segmented by consumer loyalty.
  9. 9. B. Segmenting International Markets • Companies can segment international markets using one or a combination of several variables, ex. Geographic location, grouping countries by region as Asia, Middle East or Western Europe. • Geographic segmentation assumes that nations close to one another have common traits and behaviors, example: United States and Canada. • World markets can be segmented on the basis of economic factors . Ex. Countries might be grouped by population, income levels or overall level of economic development
  10. 10. Major Segmentation Variables for Consumer Markets in USA
  11. 11. C. Requirements for Effective Segmentation To be useful, market segments must be : Measurable :The size, purchasing power, and profiles of the segments can be measured •Ex: There are approximately 30.5 million lefthanded people in the United States, Yet few products are targeted toward this segment. Accessible The market segments can be effectively reached and served. •Suppose a fragrance company finds that heavy users of its brand are single men and women who stay out late and socialize a lot. Unless this group lives or shops at certain places and is exposed to certain media, its members will be difficult to reach Substantial The market segments are large or profitable enough to serve •Ex: It is not practical for an automobile manufacturer to develop cars especially for people whose height is greater than seven feet.
  12. 12. To be useful, market segments must be : Differentiable The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs • If men and women respond similarly to marketing efforts for soft drinks, they do not constitute separate segments. Actionable: Effective programs can be designed for attracting and serving the segments. • For example, although one small airline identified seven market segments, its staff was too small to develop separate marketing programs for each segment.
  13. 13. 2. Market Targeting A. Evaluating Market Segments B. Selecting Target Market Segments C. Choosing a Target Strategy
  14. 14. A. Evaluating Market Segments To evaluate we must look at 3 factors: Segment Size and Growth: Company must collect & analyze current segment sales, growth rates and expected profitability for various segments Segment Structural Attractiveness: Ex. A segment is less attractive if it already contains many strong competitors. The existence of many actual or potential substitutes will limit profits. Company Objectives and Resources N.B The company should enter only segments in which it can offer superior value and gain advantages over competitors
  15. 15. B. Selecting Target Market Segments Target Market Definition: consists of a set of buyers who share common needs or characteristics that the company decides to serve. Undifferentiated Marketing (Mass) Targeting Broadly Differentiated Marketing (Segmented) Concentrated Marketing (Niche) Micromarketing (Local) Targeting Narrowly N.B The differentiated & concentrated tailor the offers & marketing programs while the Micro marketing tailors the products and the marketing programs
  16. 16. 3. Differentiation and Positioning Differentiation: to be branded, products must be differentiated from competitors’ ones. Dimensions of product differentiation : • Form: size, shape or physical structure ex: asprin • Features ex: telephone (waiting, caller id…etc) • Performance quality: is the level at which the product is operating • Durability: a measure of product’s expected operating life under natural or stressful conditions ex kitchen appliances, vehicles • Reliability: measuring product’s malfunction or failure ex home appliance • Style : Product’s look and feel to the buyer
  17. 17. Dimensions of service differentiation: • Ordering ease: how easy for the customer to place an order ex. Delivery • Delivery: how well the product is delivered to the customer. Includes speed, accuracy and care • Installation : refers to the work done to make a product operational in location • Customer Training: •Maintenance and repair
  18. 18. Product Position : is the way the product is defined by consumers on important attributes– the place the product occupies in consumer's minds relative to competing products. A product must have a unique identity. EXAMPLES In the automobile market; •Toyota Yaris & Honda positioned as Economy •Mercedes and Cadillac positioned as Luxuory •BMW & Porsche positioned as Performance
  19. 19. Decide on a value proposition Select Customers to serve Differentiation Segmentation Differentiate the market offering to create superior customer value Divide the total market into smaller segments Targeting Select the segment or segments to enter Create value for Targeted customers Positioning Position the market offering in the minds of target customers

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